Q4 2021 Cerus Corp Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Cerus Corporation fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen only mode.
After the Speakers' presentation there'll be a question and answer session. Please be advised that today's conference is being recorded.
Now I'd like to hand, the conference over to your speaker host today.
Matt Metairie Ani senior director of Investor Relations.
Thank you and good afternoon, I'd like to thank everyone for joining us today.
As part of today's webcast, we are simultaneously displaying slides that you can follow you.
You can access the slides from the Investor Relations website at IR Dot Sirius Dot com.
With me on the call are Obi Greenman, <unk>, President and Chief Executive Officer.
Kevin Green here since Chief Financial Officer.
Carol Moore, Sirius as senior Vice President of regulatory affairs, and quality and Jessica Hanover seriousness, Vice President of corporate Affairs.
Sirius issued a press release today announcing our financial results for the fourth quarter and year ended December 31, 2021 and describing the company's recent business highlights.
Can access a copy of this announcement on the company website at Www Dot Sirius Dot com.
I'd like to remind you that some of the statements. We will make on this call relate to future events and performance rather than historical facts and are forward looking statements.
Ample to forward looking statements include those related to our future financial and operating results, including our 2022 product revenue guidance and goals operating expenses anticipated cash use from operations.
Gross profits and gross margins as well as commercial development efforts future growth and growth strategy future product sales product launches.
Ongoing and future clinical trials ongoing and future product development, and our regulatory initiatives, including the timing of these events and activities.
These forward looking statements involve risks and uncertainty that could cause actual events performance and results to differ materially.
They are identified and described in today's press release and under risk factors in our Form 10-K for the year ended December 31, 2021, which we will file shortly.
We undertake no duty or obligation to update our forward looking statements.
On today's call will begin with some opening remarks from Obi followed by Kevin to review our financial results. We will conclude with commentary from Obi you with an update on our pipeline recent announcements and closing remarks.
And now it's my pleasure to introduce Obi Greenman, Cerus, President and Chief Executive Officer.
Thank you, Matt and good afternoon, everyone.
In 2021 series took a major step forward in realizing our goal to safeguard the global blood supply.
Our success in deploying the intercept blood system for plants in the U S. Built on our solid International foundation of routine use and drove a breakout year for the company.
On the last few calls we've spoken about the momentum the business has seen in the U S as blood centers and their hospital customers choose intercept as their preferred method for complying with the FDA guidance aimed at reducing the risk of bacterial contamination of platelets. We continued to see this trend play out in the fourth quarter and believe we are now.
Now the U S market leader for platelet bacterial risk mitigation under the FDA required guidance.
Last month, we celebrated the companys 30th anniversary.
For the past three decades, Cirrus has embarked on a bold strategy to develop and deploy a technology with a singular focus of safeguarding the global blood supply.
Following the devastation of the HIV epidemic at the time of the Companys founding preparedness remains at the core of what we do every day at Crs and we are committed to bringing products to the market. The safeguard blood components from known and future threats and then enable sustained blood availability.
While we have come a long way with over 10 million intercept doses transfused to date. So it remains much opportunity for cirrus to lead a paradigm shift in transfusion medicine on the way to achieving a new global standard of care.
With a continued broad adoption of our technology in the U S and globally, we look forward to delivering another year of strong double digit growth.
We're not providing long range guidance today, we see significant opportunity to grow our top line meaningfully over the next several years.
We expect this growth to come from a combination of extending our leadership and our currently served markets pennant.
Penetrating untapped geographies like China, and commercial success of new products like our intercept fibrinogen complex and later red blood cells.
Together with the organic growth of our total addressable markets or terms the opportunities ahead for serious are significant and enduring.
For instance, we have historically estimated the global Tam for intercept platelets to be about $1 $3 billion with a U S opportunity representing about $150 million of this total market.
With overall platelet demand growing in the mid single digits. We expect these terms to continue to grow eclipsing $1 5 billion and $200 million for the global and U S opportunities respectively over the next five to seven years.
With intercepts rapid commercial uptake, we have placed a significant focus on our ability to supply product to our customers across the globe.
To fulfill our market leadership role in supporting blood safety and availability, we continue working with our partners to expand manufacturing capacity in multiple facilities to position us to continue to grow the intercept blood system adoption in 2022, 2023 and well beyond.
As Kevin will discuss in more detail. Shortly we have planned for this in the near term by building our inventory, which we will utilize during this period to help continue to fulfill customer demand.
As we bring additional manufacturing capacity online the supply and demand balance will become more manageable and we expect this excess manufacturing capacity will allow us to continue to grow well into the future.
For intercept fibrinogen complex or IFC 2021 was filled with several market development activities and we plan to continue to position this product for long term success.
Some of these activities included sales to early adopters in our initial launch states Medicare reimbursement secured with a new technology add on payment or and tap and supporting our blood Center production partners to both come online to manufacturer IFC units and to also submit.
<unk> license applications our bla's.
Gulf Coast Regional Blood Center received its BLA approval, just before year end 2021, and more recently Central California Blood Center also received its BLA approval.
As we have been educating the marketplace about this new blood product the benefits of IFC continued to resonate with blood centers and physicians as they grapple with the challenges associated with conventional cryoprecipitate, which has several limitations and its availability for bleeding patients during the critical early phase of resuscitation.
IFC addresses several of these limitations by enabling more immediate availability for transfusion physicians and reducing wastage as conventional cryoprecipitate has a limited post thaw shelf life of four to six hours.
In 2022, we are focused on gathering real world experience data with our early customers to highlight the benefits of IFC for a variety of patient types.
With our nationwide IFC launched commencing we've also entered into commercial partnerships with blood centers of America, our BCA and one blood to further deploy IFC across the U S.
We believe leveraging our combined sales efforts, we will provide more of the market with access to IFC as the industry continues to navigate the national shortage of conventional.
Precipitate.
I will now turn it over to Kevin to discuss our results in 2022 guidance in more detail and then I will return to provide some comments on our pipeline as well as some closing remarks.
Thanks, Obi and good afternoon, everyone.
First let me Echo Obi is exciting for our strong results as we continue to expand access to intercept for patients globally.
Paving the way toward financial independence, or more specifically cash flow breakeven.
I'll get back to that in greater detail later on.
Our record Q4, 2021 product revenue of $39 9 million.
Reflecting year over year growth of 41%.
And 10% sequentially.
For the full year 2021 product revenue of $139 billion grew 42% when compared to 2020.
By geography fourth quarter sales in North America grew 108% versus the prior year period.
While EMEA was roughly flat when adjusting for foreign currency.
Within North America.
Our sales to the top five U S blood centers grew by more than 120% year over year during the fourth quarter.
While importantly.
Sales to U S blood centers outside of the top five also grew by more than 80% versus the prior year period.
With the strong growth we experienced throughout 2021 for.
For the first time in our history. The majority of product revenue was and is expected to continue to be derived from north American sales.
Moving on to our calculated platelet dose metrics.
Our fourth quarter growth the calculated number of treatable platelet doses reflects a 132% year over year increase in the U S and a 4% decline internationally against a tough comparison.
In terms of product mix for the quarter sales of intercept consumable products represented nearly 97% of our Q4 product revenue.
In addition to our product revenue and not included in our guidance.
Government contract revenue totaled $10 $2 million in Q4, and $28 $7 million for the full year.
Comparatively government contract revenue totaled $5 $4 million and $22 $3 million for the fourth quarter and full year 2020, respectively.
The year over year and sequential increases in our fourth quarter government contract revenue comes following an agreement we reached with the U S. BARDA on reimbursement for allowable costs that the company had previously been deferred.
This resulted in a one time catch up of $3 3 million.
A reversal of what had been an ongoing accrual.
Going.
Forward, we expect the agreement reached with BARDA will result in slightly higher government contract revenue than the prior several quarters.
Independent of any increases associated with ramping patient enrollment and other activities under the contract.
Turning now to our product gross profit and gross margins.
For the second consecutive quarter, our fourth quarter product gross profit was the highest in company history at $24 million compared.
Compared to $16 million during the prior year period.
For the full year.
Gross profit was $67 4 million.
Compared to $58 million in 2020.
The increase in gross profit was primarily driven by the higher product sales.
Product gross margins for the quarter were 51, 1%.
Which was roughly flat relative to the prior two quarters in 2021.
And for the full year 2021 product gross margins were 51, 5% compared to 55, 2% in 2020.
As we've discussed previously and experienced throughout the year, our fourth quarter and full year product gross margins were impacted by the product mix associated with our higher sales volume of single dose kits to customers in the U S.
Unfavorable foreign exchange rates.
And increased freight costs.
Despite pressure from elevated expenses in this rising cost environment, we continue to make progress with our ongoing margin expansion initiatives that we believe will position us for a gradual return to gross margin expansion over the coming years.
Moving on to fourth quarter operating expenses.
Which totaled $37 6 million.
And included $6 5 million in noncash stock based compensation.
For the full year 2021 operating expenses totaled 145 billion.
Including $23 6 million in noncash stock based compensation.
On both a quarterly and annual basis, we continued to deliver operating expense leverage.
Our concerted efforts on financial discipline have resulted in slower expense growth compared to our increase in topline.
We continue to believe that at the core of the business model will provide for much further leverage.
Particularly given the finite number of blood centers globally, and our focused R&D efforts.
By specific expense side fourth quarter research and development expense totaled $15 6 million compared to $17 1 million during the prior year.
For the full year 2021, R&D expense totaled $63 7 billion.
Paired to $64 $4 million in 2020.
Our total R&D spend includes continued investment in the U S. Red blood cell efforts, which are reimbursed by U S. BARDA.
As well as next generation intercept products, such as our lead Illuminator, which is currently in development.
Fourth quarter, SG&A expense was $22 million and was up 18% versus the prior year period, driven primarily by commercial costs associated with our higher product sales.
For the full year SG&A expenses totaled $81 3 million.
Up 21% versus the prior year period.
On the bottom line reported net loss attributable to <unk> for both the three months and full year ending December 31, 2021, both improved when compared to the same periods in 2020.
Net loss attributable to <unk> for Q4 totaled $9 1 million or <unk> <unk> per diluted share compared to $14 4 million or nine cents per diluted share for the prior year period.
The full year net loss attributable to <unk> totaled $54 4 million or <unk> 32 per diluted share compared to $59 9 million or <unk> 37 per diluted share in the prior year period.
Turning to the balance sheet and cash flows.
2021 was an exceptional year for the company in managing its cash while strategically investing in the business.
As a result, we ended the year at a strong position with $129 $4 million of cash and cash equivalents on the balance sheet.
As our business grows we continue to expand the use of our revolving line of credit.
And during the quarter, we drew an additional $5 million from the facility and managed our working capital lines closely.
Spike continued investment in inventory.
Accordingly cash used from operations was $1 $2 million for the fourth quarter and $33 9 billion for the full year.
In both instances these are improved from prior historical periods.
An ongoing focus area of ours.
As Obi mentioned, we are working with our manufacturing partners to scale capabilities and obtain necessary regulatory approvals for new capacity to come online and continue to meet our strong customer demand.
While we wait to obtain regulatory clearance for this capacity, we have grown our inventory levels to meet the anticipated demand growth.
And despite increased production levels over 2021, we will likely draw inventory levels down in 2022 to continue to serve our customers and support our topline growth aspirations.
We expect this will be as seamless as possible for our customers and their hospital accounts.
Consistent with the guidance provided for 2022 earlier in January today, we are reaffirming our 2022 product revenue guidance, which is a range of 157% to $164 million, reflecting year over year growth in a range of 20% to 25%.
Similar to 2021, we expect the majority of our product revenue growth in 2022 to be led by intercept platelets in the U S.
Given the ongoing challenges associated with hospital access due to Covid, our guidance contemplates modest contribution from IFC in 2022, and we look forward to this product driving more meaningful top line growth in 2023 and beyond.
As we discussed on our third quarter call, our topline growth and the financial discipline. We are deploying at Sirius is helping drive us towards achieving cash flow breakeven.
In order to highlight this progress over the course of 2022 and beyond we plan to begin reporting non-GAAP adjusted EBITDA.
Beginning with our Q1 results this spring.
To help with the modeling of this measure I wanted to share with you exactly how we will be calculating our non-GAAP adjusted EBITDA.
To start we will begin with a reported loss from operations.
Subtracting out government contract revenue and the related costs, which are mainly reflect reimbursement from U S. BARDA.
From there we will also back out noncash stock based compensation expense.
Depreciation and amortization and the P&L impact from our Chinese joint venture.
We believe this will provide us with a benchmark and insight into the cash flows at which our core business operates.
We look forward to demonstrating progress against this important benchmark and providing me with a tabular breakout beginning with our Q1 results.
With that let me turn the call back over to Obi to provide an update on our pipeline as well as a few closing comments.
Thank you Kevin while we continue to make progress as Kevin just outlined towards achieving cash flow breakeven in the near term.
We're also focused on advancing several R&D programs that we think will continue to provide runway for our future growth and global leadership position in transfusion medicine.
Our R&D programs are focused on continuing to innovate pathogen inactivation to unlock new markets incorporating.
Incorporating next generation technologies to extend our IP and developing enhancements to our offering that improve both customer experience and our cost profile.
Regarding the intercept red blood cell program, our U S efforts and enrolling patients for our two phase III studies, rather radice and recipe are ongoing.
While COVID-19 continues to present challenges with respect to the pace of enrollment of these studies, we plan on providing more detail later this year around our expected timeline for completion of these studies and subsequent PMA submission.
In Europe , you will recall, we completed the modular submission filing for CE Mark with TV during the second quarter of 2021 and that the Dutch competent authority CPG would be reviewing a portion of the submission.
We anticipate dialogue with both entities in the coming months, but do not yet have an update on this submission today.
We continue to plan for a launch of the intercept red blood cell system in Europe in 2023.
We also continue to work on a new lead illuminator, which represents the next generation of our intercept platelet and plasma product line.
Over the next several quarters, we will be completing R&D workflows and preparation for regulatory submissions and look forward to introducing this product to the market with the expectation that this new device will serve as the backbone for future intercept product durations as well.
In summary, our commercial momentum in 2021 is positioned to continue in 2022 and beyond.
Building on our platelet franchise, we have several additional growth opportunities laid out over the next several years. They will also benefit from our improving financial profile.
We look forward to further expanding access to intercept products for patients in the years ahead, and realizing our important mission to be the standard of care in transfusion medicine.
Let me turn it back over to the operator for Q&A.
If you would like to ask a question. Please press Star then one if your question has been answered and you'd like to remove yourself from the queue press the pound key.
Our first question comes from Josh Jennings with Cowen Your line is open.
Hi, good evening, thanks for taking the questions and congratulations on the strong finish to the year.
Appreciate you laying out the guidance parameters youre reiterating.
Helping us sort through some of the details.
The U S growth.
Being the majority of the contribution to the guidance level makes sense I just wanted to review just on the O U S growth opportunities I know 2022.
Not forecasting significant contribution and growth from the U S.
Internet.
Platelet and plasma franchise, but thinking about into the out years and then you have China you have approvals in Germany could you just help us walk through the opportunities to accelerate growth in EMEA, but especially in our O W. Because if you look at some of the charts you showed in your presentation. The rest of world seems like it's a very de minimus contributor today, but.
Where can that go tomorrow and in the future.
Yes, Thanks, a lot Josh this is obi.
Take a shot at that first and if Kevin you want to.
Add to it let me know.
But.
We still see growth coming out of the European markets I think a lot of times, it's been somewhat binary there. So we've been.
Reluctant to commit too much in any given year just until those binary events happen, but we definitely have growth in our guidance for 2022.
As I mentioned in the prepared remarks, the overall Tam historically said for players was globally by $1 3 billion and we think it's probably north of $1 5 billion now just as a function of the overall growth in platelet demand over the last several years, we're seeing mid single digit growth in many geographies and then.
As you mentioned.
If it's not already soon will be the largest market opportunity for intercept in China and so we're working diligently with our joint venture partner, there Z BK to get a submission this year hopefully going to have clarity on whether we need to do a study there.
This year as well.
That study would start if we need to do it.
Post submission.
But still looking at.
An opportunity to start selling there in the next couple of years.
And so overall just looking at where we currently are with our platelet.
Market share penetration ex U S. You know theres a lot of room to grow both in EMEA and in China as well as other countries around the around the world.
Thanks for that Obi and maybe my follow up just wanted to ask about the IMC launch understanding that you guys have.
Tough to the street understand that mid 2022.
It was not going to see a major inflection, but you're still building the base of that.
For commercialization in the foundation here, but just was interested in the commercial collaborations to facilitate penetration that you announced with I think one blood and blood centers of America.
Can you just help us understand that business model, a little bit better I mean, it sounds like it's going to be similar to your current setup with blood centers.
Selling kits and they'd have.
Distribution responsibilities, but you can help walk us through that.
And then are there other collaborations in the pipeline potentially like within ERC or or other major blood centers that could get involved in this collaboration effort. Thanks a lot.
Yeah. Thanks, Josh that's a great question clearly we were <unk>.
Happily surprised that we got the BLA is both in Gulf Coast in Texas, Our production partner, there and also Central California Blood Center in California are much earlier than we expected. So that that has enabled a nationwide launch starting in Q1 of this year.
So thats great news not only for.
<unk>.
Moreover for for patients and for our transiting physician customers.
Historically, we sort of look at this as a business model, where you would require a lot of direct access to hospitals to solve the product and therefore, we wanted to sell the finished biologics to those hospital customers and Thats still the case, but given the demand that we're seeing from hospitals and our ability to then leverage our existing sales force and <unk>.
Partnership with our blood center customers.
Really what happened in 2021 is a lot of the major blood centers came to us and said hey, we'd really like to be selling this product directly to our customers given our historical.
Hospital contracting process, you guys are secured and <unk> so the business models.
Somewhat similar to what we've seen now with intercept platelets, where we can realize a premium that improves our overall profitability and so that and tap pricing definitely had an impact on the way blood center saw this product opportunity and so with that.
We started discussions with one blood in Florida.
Given their strong presence there and then also with BCA, which represents roughly 55 or 60 blood Center.
Large blood centers across the U S and they said, we really like to have this product for our membership.
And be able to help them solve this differentiated product that's higher value and so we partnered with them towards the end of last year. So I think there is.
What it all sort of adds up to is that we will be able to really have a nationwide launch starting in Q1 will be able to work with our existing blood center customers in our existing sales force and really leverage that more fully so it should have.
And impact on our overall SG&A model for this in a positive sense and then you mentioned lastly, the American Red Cross clearly, they're our most important customer globally, we have a strong relationship with them in partnership they were early on.
To sort of realize the importance of creating value added products in this field.
And getting paid for it for those products and so I think there is strong interest on their end up there in the midst of.
As are all blood centers, both in the U S and almost globally have a hard time meeting the current demand for blood components and so that's their main priority right now is really making sure that they can supply their hospital customers.
Sustain the business given the sort of.
Disproportionate demand for blood components relative to the last decade.
And standing up their supply chain to do that so it's an ongoing discussion with the Red Cross and we ultimately ultimately working with them as well.
Excellent. Thanks again.
Yes, Thanks, a lot Josh.
Our next question comes from Jacob Johnson with Stephens. Your line is open.
Hey, Thanks, Good afternoon, everybody, maybe maybe following up on <unk> question around IFC.
You've got a couple of partners with DLA and hand, you've got blood centers coming to you wanting to sell this product.
You are talking about modest contribution as you have been talking about for 2000 2010 can you just talk about what you thought.
Thanks.
At some point from this product is and what makes that happen is this just your sales force getting out.
And talking to hospital customers.
Key opinion leaders highlighting the value proposition.
I assume that's probably been somewhat impacted by the hospitals being covered but im just curious what kind of drives drives ultimate adoption of IFC.
Yeah. Thanks Jacob.
Great question, what are the sort of real milestones for that that product over the next couple of years now first what we've seen and this is true for platelets is that there is.
Once you have the real world experience data set it really does drive demand.
In this case.
We're talking about saving patients lives from dramatic blood loss or maternal hemorrhage. So once we have some of that data available in 2022 and sort of going into 2023, I think that'll have a big impact on sort of how physicians see this product and its utility.
Other data points would be around sort of wastage rates in hospitals and does it really impact the wastage rates I think we're already seeing that but having that documented.
The systematic way.
We've historically talked about this craft at two study that was completed last year in the UK that looked at the early use of crowd precipitous too.
Deal with dramatic blood loss and with a mortality endpoint I think that the latest news on that study is that it will read out in the September timeframe.
I think that could have a big impact on sort of the way physicians look at to use use of IFC earlier in.
The treatment of dramatic blood loss and so is it part of the coolers that gets sent out set up to the or.
Immediately or is it something that historically has been delayed so it's a number of different data points that I think will really drive.
Overall demand for the product and the nice thing about the current partnerships, we have now with BCA and one blood and others is that we have enough capacity in the system to be able to meet the demand that that's likely coming.
Got it perfect and then just.
As a follow up maybe for Kevin just.
Yes, SG&A Ken.
Take a little bit of a step up in 2021 and can you prepay.
Preparing for this IFC launch as we head into 2022, just any kind of commentary around SG&A trends any areas for investment.
The outlook there in 2022.
Yes, so I think it has the potential to creep up slightly but certainly at a much slower pace than the ramp in revenue.
2021, our prepared remarks, we're really centered around variable compensation and as we outperformed our sales team, we want them to share in that and so.
Hopefully we are in the same situation.
2022, but beyond that we do expect that we will return to more cut.
Customer facing.
Travel more in person trade shows and marketing events, and so that's where I think youre going to see some of that cost tick up slightly from 2021 levels.
Yeah.
Got it thanks for taking the questions.
<unk>.
Our next question comes from Brandon Folkes with Cantor Fitzgerald. Your line is open.
Alright, Thanks for taking my question and congratulations on another good quarter and.
Maybe just Kevin just following on from that part of your question. When you talk about SG&A creeping up or is that on an annual basis or from the <unk> run rate.
And then secondly, maybe no.
You have a very strong cash position.
You've got the cash burn coming down you talked about the pathway to profitability.
But you also just talked about the potential growth and especially in these times right. How do we think about.
Capital allocation going forward.
The leverage in the business model now.
How much of that Tam expansion does that address verses maybe additional investment.
The JV in China, obviously.
It's capital light, but maybe just any color in terms of Opex spend. This is interesting next time. Thank you.
Yeah, why don't I take a stab at Obi if theres something you wanted to contribute please feel free so.
There's a lot there.
Let me start with the first question about SG&A quarterly versus year to date I think it's really both.
Uh huh.
As we.
Fine tuned our forecast and as we saw sales continuing to.
To elevate beyond our guidance.
Guidance, we continue to increase the overall compensation accrual. So that's certainly something you saw in Q4 and for that matter for the full year.
As it pertains to leverage going forward and with the increase in terms.
The business really is.
STREAMWAY Leverages <unk>. So if you think about our existing commercial footprint in EMEA.
And the U S.
With the Tam increasing organically, we really don't need to add a lot of SG&A cost to realize that.
The revenue opportunity there when we talk about our joint venture in China.
Really incumbent on our joint venture.
Sarah sales effort, it's the joint venture and it's an independent stay.
Standalone operation and so.
We will.
Certainly consolidate and record our share of revenue Cogs and expenses, but we expect that that will largely be accretive soon after commercialization, but again were a.
A few years away from that becoming a reality so in short.
It's a highly leveraged business model, we've got a fairly solid balance sheet, we continue to invest in the future and likely will continue to invest in the future both on working capital but also.
Capacity expansion and quality concerns.
And the last thing I would add Brandon is just the sort of evolving R&D portfolio. So we've got a lot of exciting things. There. We mentioned today the progress on the LGD illuminator and that's really a platform for future growth and product iterations not only to really.
The address customer needs, our delight them, if you will having something thats a lot easier to use but ultimately that leads to a change in our cost profile for our business as well and so that's something we clearly would like this to accelerate but to <unk>.
Evans point I think that the main takeaway is that as we see.
Adoption of intercept globally. This is a highly leveraged business and.
The footprint that we need to be able to address the market is and doesn't need to grow that materially even with the ultimate launch of the red blood cell system.
Very helpful. Thank you two if I could you.
Thanks.
As a reminder to ask a question. Please press Star then one.
Our next question comes from Mark Massaro with <unk>. Your line is open.
Thank you Alonso.
Taking the question.
Okay.
Maybe put some pay TV 2022.
So that accounts for cobalt.
Thank you.
You can also touch on some of the drivers that make that.
It's John glass.
Thank you.
Yes.
I'll start and so a lot of the growth as we mentioned in the call.
Our prepared remarks is really driven by the growth in the United States.
We still see that intercept platelets are the preferred option for the FDA guidance.
I think that there has been reasonable market.
Sure.
The percent adoption by the major customers in the United States has been significant but theres still a lot of room to grow and so a lot of our focus in 2022 is really about just.
Managing the supply demand balance that we see given our current capacity.
We also mentioned that we do see growth coming out of EMEA, but a lot of that.
A lot of.
Our guidance sort of anticipate that most of our production capacity will be directed towards the U S growth.
Kevin is there anything else you wanted to add to that.
No I don't think so.
No I don't think so I think you covered it sufficiently.
Okay.
Okay. Okay.
Follow up.
Any color on the goal of getting the bank cost.
And is that by 2023.
And if you could speak to whether or not any progress also swing.
Sure.
Okay.
Yes. Thanks for the question so as we mentioned.
Historically, the Red Cross has communicated that they'd like to get to a 100%.
<unk> made great strides towards that goal in 2021 and continue to do so in 2022 I think some of that comes from just sort of the overall simple.
Simplicity of providing a single.
The most safe single blood component.
That they can so meaning that they don't want to hear more multiple inventories and they want to have the safest platelet components. So that's sort of the lineup their line of thinking so I think a lot of their ability to get to a 100% will be a function of.
Do all of their hospital customers want to get there.
What we understand they do.
And then secondly is our ability to meet the demand from a capacity standpoint.
Great. Thanks for taking the question.
Yes. Thank you.
There are no further questions I'd like to turn the call back over to Obi Greenman for any closing remarks.
Thank you again for joining us today and for your interest in Cerus, We look forward to speaking with you at <unk> 40, <unk> annual virtual Health care Conference next month and sharing our progress throughout this year, thanks very much.
This concludes the program and you may now disconnect and enjoy the rest of your day.
[music].
Sure.
[music].
No.